EUR/USD: Distant parity

(News Bulletin 247) – The Dollar should continue to appreciate as the US central bank is much more aggressive than the European central bank in fighting inflation. It is true that the economies of the two continents are not comparable and that the prospect of a recession in the United States is not really scary because it could be short-lived. Moreover, “horse remedies” are not the least effective. In Europe, there is an additional difficulty, that of managing significant rate differences. Besides, a recession could turn out to be really diplomatic.

Clearly, there are many arguments in favor of a deeper depreciation of the European currency. However, parity has proven to be an unavoidable psychological factor strong enough to thwart rational economic explanations.

Holding this state of affairs and as long as it lasts, we must avoid, in our view, staying in the seller’s camp but not buying recklessly either.

For the time being, traders are looking to move away from parity and at midday on the foreign exchange market, the Euro was trading against the Dollar at around $1.0239.

KEY GRAPHIC ELEMENTS

Between potential “remuneration” less weak than expected, and risk of recession, particularly with regard to the weight of German industry, the Euro has seen its rebound, operated since the achievement of perfect parity, dry up, in entering a rebalancing phase, not without volatility, is the chosen option. Neutral opinion issued, avoiding taking positions immediately.

FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will maintain this neutral opinion as long as the prices of the Euro Dollar (EURUSD) parity are positioned between the support at 1.0000 USD and the resistance at 1.0274 USD

CHART IN DAILY DATA

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